How to Set (And Stick To) A Holiday Budget

If you’ve already planned out how you’ll afford this year’s gifts, decorations, plane tickets and sugarplums, congratulations—you’re ahead of the game. But when it comes to staying on track, it can seem like the world is working against you with holiday deals and seasonal sales, says Charlie Shipman, a financial planner at Blue Keel Financial Planning in Weston, Connecticut. Here are his tips on sticking to your plan:

1. Double-check your figures

When reviewing your budget, make sure you’ve accounted for all holiday purchases, from centerpieces for dinners and garlands for parties to gifts for the office Secret Santa. “It might surprise you to see what you spend every year,” explains Shipman. “Non-gift items add up, and many people forget to factor them into their budgets.”

2. Set clear priorities

If you’ve set a spending limit, make sure you’re putting that money toward whatever brings you the most joy. “Take the time to really figure out what makes you happy,” advises Shipman. “Is it important to you that your children get lots of gifts? That’s fine, but maybe you and your spouse agree to spend less on gifts for each other.” It’s easier to stick to a budget if it reflects what you really want to be spending on.

3. Look for bargains all year

Eagle-eyed shoppers can pick up great seasonal decorations at tag and garage sales in the off-season, giving you more room to play with your holiday budget. “We picked up a nice $700 artificial tree at an estate sale in our town for $35,” says Shipman. “Now we don’t have to spend the usual $100 or so on a Christmas tree.”

4. Bring a friend along

Take a friend (or your spouse) to the mall for support. Tell them your budget and your shopping list so they can stop you from making impulse purchases—for yourself and others.

5. Start a holiday fund

Starting in January, “save a little bit every month and use this earmarked money for gift purchases and other holiday expenses,” suggests Shipman. (If you save just $75 per month from January to November, by December you’ll have plenty more than the $804 most Americans say they’ll spend on the holidays.) Saving over time will help you avoid a large cash outflow at the end of next year and the temptation to carry holiday debt on a credit card or take out a holiday loan. Designating savings specifically for holiday use also means you’re likely to save more, and less likely to cheat and use non-holiday fund money for holiday expenses—studies have shown that earmarking money helps people exert more self-control over their spending.

My parents taught me all that when I was TEN YEARS OLD! The problem isn’t holiday spending. The problem is we have people around who were never taught money management, self-discipline, life priorities or impulse control. I don’t know when parents abdicated their duty to parent but obviously they have.

The information is good, but the example of purchasing a used fake tree so you don’t need to spend money on a Real Christmas tree is forgetting about the tradition of hunting and harvesting a real tree with your family, decorating with your favorite items, and all the while having the opportunity to experience the fresh air in the fields or outside, and having the fresh scent of a Real tree in your home, plus forgetting the impact of a fake tree that will last for thousands of years in a landfill, whereas, a Real tree will break down into helpful mulch, habitat for fish in a pond or waterway, and give people jobs on a tree farm. Young trees use more carbon dioxide and give off more oxygen than older trees. Real fresh, fragrant Christmas trees are grown on farms. Fake trees have lead and are bad for the environment and are manufactured overseas.

Great article with smart, sensible ideas. I especially like the advice to spend money on what beings you joy and happiness. We get so caught up in how “it used to be done” or “how we’ve always done it,” or even how we feel “it should be done,” it’s easy to forget this season is about love and joy.